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2014 (10) TMI 1016 - KARNATAKA HIGH COURT
Nature of expenditure - rent paid to the landlord and registration expenses of Chennai unit - revenue or capital expenditure - HELD THAT:- 5th unit at Chennai was set up in a rented premises. After taking the premises on rent for two months, they were involved in making interior infrastructure. It is only after two months, they were able to commence the unit. The rent paid subsequent to the period is allowed as revenue expenditure.
Rent of two months prior to the commencement of the unit is disallowed, on the ground that it constitute the capital expenditure and ₹ 2,500/- is disallowed on the ground that the same being registration fees. If the assessee has taken the premises on rent, merely because the date on which the premises is taken on rent, is unable to carry on the business, would in law, make no difference and the rent paid would not become the capital expenditure if two months is taken to commence the business of the unit. The finding recorded by the three authorities that two months prior to the commencement of the unit constitutes the capital expenditure is unsustainable. Similarly, the payment of registration fees constitutes capital expenditure is unsustainable and therefore,the findings recorded by the three authorities are hereby set aside and the 1st substantial question of law is answered in favour of the assessee and against the revenue.
Telecommunication expenses inclusion - excluded from the export turnover when such expenses were not part of negotiated price and hence did not originally form part of negotiated price and hence did not originally form part of export turnover? - HELD THAT:- As relying on M/s.Sasken Communication Techonologies Ltd. [2014 (9) TMI 1210 - KARNATAKA HIGH COURT] had remanded the matter to the Tribunal to record the findings on merits as well as on the alternative grounds. Following the said judgment, the findings recorded on the 2nd substantial question of law by the authorities, are hereby set aside and the matter is remitted back to the Tribunal for fresh consideration and in accordance with law
Benefit of tax holiday under Section 10-A - interest income although the same formed part of business income of the appellant - HELD THAT:- As relying on M/S MOTOROLA INDIA ELECTRONICS PVT LTD [2014 (1) TMI 1235 - KARNATAKA HIGH COURT] the benefit of tax holiday under Section 10-A of the Act is available even in respect of interest on income. Accordingly, the 3rd substantial question of law is answered in favour of the assessee and against the revenue.
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2014 (10) TMI 1015 - KARNATAKA HIGH COURT
Statutory deduction u/s 36(1)(viia) - provision for bad and doubtful debts in excess of provision made in the account - HELD THAT:- If a provision is made in excess of the limits prescribed under the section, the assessee would not be entitled to deduction of the excess amount. At the same time, when the section speaks about the deductions in respect of any provision for bad and doubtful debts made unless such a provision is made, the assessee would not be entitled to the deduction. Once such a provision is made and the said amount is within the limit prescribed under statute, the assessee would be entitled to the amount that is provided for in the accounts. The argument is that when the provision made is less than the amount prescribed under the law, the assessee is entitled to the maximum as prescribed cannot be accepted. The language employed is clear and unambiguous. This is a provision in any fiscal legislation. Therefore, the question of going into the intention or object behind the provision in the light of those clear words would not arise. Therefore, when once a provision is made for bad and doubtful debts and such a provision is less than the limit prescribed under the section what the assessee would be entitled to deduct would be the amount mentioned in the said provision and not the amount prescribed in the section. In that view of the matter, the orders passed by the authorities are not in accordance with law and the judgment of the Tribunal rendered in Syndicate Bank’s case on which reliance is placed runs counter to the statutory provision and therefore, the said order passed by the Tribunal does not lay down the correct law. Decided against the assessee.
Deduction u/s 36(1)(vii) without adjusting the said amount of bad debts against the provision available under Section 36(1)(viia) of the Act brought forwarded and created during the year - HELD THAT:- In view of the judgment of the Apex Court in the case of CATHOLIC SYRIAN BANK LTD., Vs. COMMISSIONER OF INCOME TAX, THRISSUR in [2012 (2) TMI 262 - SUPREME COURT] the issue has been correctly answered by the Tribunal in favour of the assessee and against the revenue.
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2014 (10) TMI 1014 - KARNATAKA HIGH COURT
Input tax credit - LPG stock transferred to places at outside the State from the Devanagunthi bottling plant - maintenance of separate records - rule 131 (3) of KVAT Rules, 2005 - HELD THAT:- In order to decide the questions of law which are framed in these petitions, there should not be any dispute of facts. The assessee contends from Devanagunthi bottling plant in respect of non domestic LPG, there are no stock transfers. All that LPG is purchased within the State sold within the State as is reflected from the invoices. The authorities have not applied their mind to these contentions nor have recorded any finding based on facts.
Under the circumstances the proper course is to set aside the order impugned in these petitions - matter remanded back to the first appellate authority to consider the documents produced by theassessee and then decide from Devanagunthi Bottling plant, whether there is a stock transfer in respect of non – domestic LPG purchased from local registered dealer and if there is no such stock transfer and if all these purchases is sold within the State, then whether the assessee is entitled to the benefit of input tax credit.
Appeal allowed in part by way of remand.
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2014 (10) TMI 1012 - PUNJAB AND HARYANA HIGH COURT
Permission for withdrawal of petition - Counsel for the petitioners prays that this writ petition may be dismissed as withdrawn - HELD THAT:- In view of the statement made by counsel for the petitioners, the writ petition is dismissed as withdrawn.
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2014 (10) TMI 1011 - TELANGANA AND ANDHRA PRADESH HIGH COURT
Computation of Arm’s length price - Selection of comparables by TPO - HELD THAT:- SLP dismissed.
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2014 (10) TMI 1010 - ITAT DELHI
TP Adjustment - computation of operating profit, the assessee did not take into account superannuation contribution as it pertained to an earlier year, and it pertained to payment for software which was put to use in a later year - HELD THAT:- There is a categorical finding by the CIT(A) that superannuation contribution pertains to the assessment year 2000-01 and 2001-02. This finding remains uncontroverted.
There cannot indeed be any rationale in taking into account this expenditure for computation of operating profits of the assessee for the current year. Similarly, there is a categorical finding that Catia software, in respect of which amount of ₹ 8,21,628 was excluded, was not used for the purpose of any work in the relevant previous year and it was only subsequent year that this software was actually used. This finding also remains uncontroverted. Clearly, therefore, this expense cannot be included in the computation of operating profit for the current year.
As regards forex gain, the relief granted by the CIT(A) is only a natural corollary to the stand taken by the TPO to the effect that the forex losses are to be included in computation of operating income. When he does so, it cannot be open to him to take a stand that income from forex gain is to be treated as non operational income. In any event, forex gains cannot be considered in isolation of the revenues generated. It is in respect of such revenues that forex gains are received.
As for the exclusion of bad debts, amortizations and provisions, in computation of the PLI of the comparables, we are unable to see any rationale in the same nor has it been justified before us. In view of these discussions, in our considered opinion, the stand taken by the CIT(A) does not merit any interference by us.
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2014 (10) TMI 1009 - KERALA HIGH COURT
Expeditious investigation in the crime - Petition is one of the accused in the crime - HELD THAT:- Now, the officer in charge of investigation has submitted report that the investigation is over practically, and that report on facts has already been submitted to the concerned authority. The investigating agency is now waiting for sanction to submit final report. In such a situation, the two writ petitions can be closed. The main prayer in both the petitions is to expedite the investigation. Once investigation is over, the other prayer need not be considered.
The investigating officer has conducted investigation in all ways possible, and there are no irregularity or flaw in the investigation conducted by him. In the particular situation, there is no necessity to grant the second prayer made by the writ petitioner, ordering investigation by somebody else.
Petition closed.
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2014 (10) TMI 1008 - SC ORDER
Export of services - testing agency - privity of contract - technical inspection and certification agency services - Technical Testing and Analysis Agency Service - goods imported by customers located abroad - Circular no.56/5/03ST dated 25th April 2003 - destination based taxation - clarification regarding rescinding of N/N. 6/99 dated 9th April 1999.
HELD THAT:- Issue Notice.
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2014 (10) TMI 1007 - ITAT BANGALORE
Revision u/s 263 - deduction u/s. 80P(2)(a)(i) - HELD THAT:- In a recent judgment in CIT v. Sri Biluru Gurubasava Pattina Sahakari Sangha Niyamitha Bagalkot [2015 (1) TMI 821 - KARNATAKA HIGH COURT] took the view that when the status of the assessee is a co-operative society and not a co-operative bank, the order passed by the AO extending the benefit of exemption from payment of tax 80P(2)(a)(i) of the Act is correct and such an order is not erroneous and therefore, jurisdiction u/s. 263 of the Act cannot be invoked.
We set aside the order of the ld. CIT and uphold the order of the AO allowing deduction u/s. 80P(2)(a)(i) of the Act to the assessee.
Interest earned on deposits with Davangere Urban Co-op. Bank - HELD THAT:- In the present case, the interest in question is from the deposits maintained with Davangere Urban Co-op. Bank, which is a co-operative Bank and the making of such deposit has no nexus with the business of the assessee. The interest earned on such deposit can therefore be not considered as income derived from the business of providing credit facilities U/s.80P(2)(a)(i) of the Act or interest derived by a co-op. society from its investments with any other co-op. society, as contemplated by the provisions of s. 80P(2)(a)(d) of the Act. Therefore, following the decision of the Tribunal in the case of Sri Basaveshwara Credit Co-operative Society Ltd., Hirekerur [2013 (5) TMI 1010 - ITAT BANGALORE] we hold that the order of the ld. CIT u/s. 263 of the Act on this issue calls for no interference.
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2014 (10) TMI 1006 - ANDHRA PRADESH HIGH COURT
Maintainability of appeal - non-compliance with the requirement of payment of 12.5% of the disputed sales tax - HELD THAT:- A Division Bench of this Court, in Ankamma Trading Company [2011 (2) TMI 1254 - ANDHRA PRADESH HIGH COURT], held that payment of the admitted tax, and 12.5% of the disputed tax, beyond the period of sixty days, from the date of receipt of a copy of the order of the assessing authority, would disable the appellate authority from admitting the appeal.
The power available to the Supreme Court under Article 142 of the Constitution of India, is not available to the High Court and, in the light of the judgment in Ankamma Trading Company1, this Court would not be justified in passing any order contrary thereto on sympathetic considerations - the reassessment order of the Commercial Tax Officer and the VAT returns, both of which form the basis for the petitioner’s claim to have excess input tax credit, were passed and filed after the period of sixty days, for pre-deposit of the disputed sales tax of 12.5%, had expired.
Petition dismissed.
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2014 (10) TMI 1005 - ITAT INDORE
Revision u/s 263 - merger of an order with appellate order - independent enquiries made by the AO or not - Failure of the AO to make the addition on the basis of the statement - non genuine unsecured loans - HELD THAT:- It is not a case where it can be said that the assessing officer has not examined the issue relating to the addition of ₹ 4.5 crores as well as land dealing. If the assessing officer has taken a concious view after appreciating the evidences, documents, papers found during the course of search, the order passed by the assessing officer in our opinion cannot become erroneous merely that it is not in accordance with the whims and fancies of the CIT or addition has not been made as the CIT feel appropriate.
It is not the case of the revenue that the view taken by the assessing officer was unsustainable in law. This is also an undisputed fact that against this addition, the assessee went in appeal before the CIT(A) and CIT(A) has duly considered this issue in his order the copy of which is placed before us in the paper book. The order of the assessing officer to that extent got merged with the order of the CIT(A) and therefore the CIT in view the explanation (c) to section 263 does not have any jurisdiction to revise the assessment on this issue.
Failure of the assessing officer to make the addition on the basis of the statement 20.8.2008 - HELD THAT:- The assessing officer after examining the statement of the assessee did not prefer to make the addition. The income has been surrendered by the assessee on the basis of the documents found and seized during the course of the search as is apparent from the computation statement of income on the basis of which the returns have been filed by the assessee in response to notices issued u/s 153A, the copy of which we pursued and placed before us in the paper book filed before us. On this basis it cannot be said that additions of ₹ 4 crores were not surrendered by the assessee. In fact, the assessee made the disclosure in all these years much more than ₹ 4 crores. Therefore on this issue also in our opinion the order passed by the assessing officer cannot be regarded to be erroneous and prejudicial to the interest of the revenue.
Surrender of income - non genuine unsecured loans appearing in the balance sheet - HELD THAT:- There is proper application of mind on the part of the assessing officer but CIT did not appreciated the fact properly and correctly and remained under the incorrect assumption as if addition of ₹ 25,00,000/- was not made. On this basis the order passed by the assessing officer cannot be regarded to be erroneous and pre-judicial to the interest of the revenue.
Loan taken from M/s Shikhar builders - HELD THAT:- Issue has duly been discussed and examined by the assessing officer and after discussing, he came to the conclusion that this loan is genuine one. This is included within the sum of ₹ 1.11 lacs as mentioned in the preceding paragraph. This cannot be regarded to be a case where no enquiry has been conducted by the AO and thus there is no error in our opinion in the order of the assessing officer giving the jurisdiction to the CIT u/s 263. DR even though vehemently supported the order of the CIT but could not convince us whether the view taken by AO is unsustainable in law.
Payment made to sukhram in cash - HELD THAT:- The assessee has duly disclosed undisclosed income in the A.Y.2008-09 to the extent of ₹ 1800000/- in addition to the other undisclosed income in different assessment years, as enumerated by us in the preceding paragraphs and which we verified, the income so disclosed is sufficient to cover these declarations and in our opinion also there was no need to make further addition once the assessee has duly declared the income more than what he surrendered during the course of search in this regard. On the basis of this fact it cannot be said that the order passed by the assessing officer is erroneous and prejudicial to the interest of the revenue. It is not the case of the revenue that the assessee has not surrendered additional income during the assessment year 2008-09.
Where the A.O. do not agree with the Assessee, he should discuss the same in the Assessment Order so that the assessee should know the reasons thereof and file the appeal. In this case the A.O. after examining the issues, on some points preferred not to make the addition. Therefore, in our opinion, there is no error in the order of the A.O if he has not discussed the issue relating to each every income which is surrendered by the assessee in the return, in the Assessment Order. It is only the queries raised by the A.O. and the submissions made by the assessee will speak of whether the A.O. has applied his mind or not.
It is not the case of the revenue that the statement recorded during the course of the search were not looked into by the assessing officer during the course of the assessment proceedings. The assessing officer has duly examined the statements given by the assessee as is apparent from the assessment order in the case of the assessee while completing the assessment.
In view of various decisions as discuss by us in the preceeding paragraphs and finding given by us, we are of the view that the CIT was not correct in law in exercising the jurisdiction u/s 263, and cancelling the assessment and accordingly we quash the order passed u/s 263. - Decided in favour of assessee.
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2014 (10) TMI 1004 - ITAT DELHI
Unexplained cash credits u/s 68 - As per AO identity of creditors, capacity of creditors to advance the money and genuineness of transaction were not proved during the assessment proceedings - CIT-A deleted the addition - HELD THAT:- When the member of co-operative society deposits money in his account maintained with the co-operative society, the money does not become unexplained cash credit of the society, unless the identity of the member is not proved. In the case on hand no such evidence has been gathered by the AO. On the other hand the assessee has given evidence as to the identity of the member. The factual finding of Ld. CIT(A) could not be controverted by the DR. Hence, we have to uphold these factual findings of Ld. CIT(A)
In view of the above discussion and in view of the fact Ld. Departmental Representative could not controvert the factual recording made by the first appellate authority and as the assessee has filed all necessary evidence before the revenue authorities, we uphold the order of first appellate authority and dismiss this ground of revenue.
Disallowance u/s 80P as against the denial of deduction u/s 80P(2)(i) - AO rejected the claim for the reason that the books of accounts have been rejected by him - CIT(A) has reversed this decision - HELD THAT:- Under these circumstances we uphold the finding of the first appellate authority that deduction u/s 80P(2)(i) is to be granted. - Decided against revenue
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2014 (10) TMI 1003 - ITAT AHMEDABAD
Admission od additional evidence -non deduction of tds u/s 195 - HELD THAT:- Application has been made for admission of additional evidence and it is submitted that these evidences would be material and would help in deciding the issue. Considering the fact that the additional evidences would help in deciding the issue the same are admitted. However since these evidences were not available before lower authorities and also the case laws which were relied upon by the Assessee were not considered by the lower authorities, we are of the view that in the interest of justice and fair play, the issues raised in the appeal needs to be considered afresh in the light of additional evidence submitted by the Assessee and the other decisions on which it would like to rely upon - remit the issue to the file of A.O to decide the issue afresh after considering the submissions of the Assessee, the decisions relied upon by Assessee and in accordance with law. - Appeal of Assessee are allowed for statistical purposes.
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2014 (10) TMI 1002 - GUJARAT HIGH COURT
Disallowance of interest expenses u/s 14A - HELD THAT:- Conclusion arrived at by the Tribunal is based upon a finding of fact recorded by it after appreciating the evidence on record. On behalf of the appellant, nothing has been pointed out to dislodge the finding of fact recorded by the Tribunal, nor is it the case of the appellant that the Tribunal has taken into consideration any irrelevant material or that any relevant material has been ignored. Under the circumstances, in the absence of any perversity in the finding of fact recorded by the Tribunal, the same does not give raise to any question of law. The said ground of appeal is, therefore, rejected.
Disallowance of additional depreciation u/s 32(1)(iia) - HELD THAT:- As submitted that as on 31.03.2002, the company had no installed capacity in respect of manufacturing of parts and therefore, the manufacturing in the current year may be considered as 100% increase in installed capacity in respect of manufacturing of parts. The Tribunal, in the impugned order, has concurred with the above findings of fact recorded by the Commissioner (Appeals) while upholding the deletion. Even before this court, on behalf of the revenue, nothing has been pointed out to controvert the concurrent findings of fact recorded by the Tribunal. Under the circumstances, the conclusion arrived at by the Tribunal being based upon concurrent findings of fact after appreciation of the evidence on record, does not give rise to any question of law.
Disallowance of royalty - recurring expenditure payable on the basis of sales - HELD THAT:- Tribunal observed that since it was a recurring expenditure payable on the basis of sales and the assessee has not acquired any capital asset or permanent right, the payment of royalty is allowable as business expenditure. On behalf of the revenue nothing has been pointed out to controvert the findings of fact recorded by the Tribunal. Under the circumstances, the conclusion arrived at by the Tribunal being based upon findings of the fact recorded after appreciating the evidence on record, in the absence of any perversity being pointed out therein, does not give rise to any question of law. The said ground of appeal is also rejected.
Addition on account of arm's length price in respect of sale of material to associated concern - HELD THAT:- After recording the explanation given on behalf of the assessee, viz., that the transactions considered by the Assessing Officer are not substantial as compared to the volume of the transactions, the Tribunal further found that in most of the transactions, the assessee had earned higher sales price and in totality, the assessee had gained higher prices as was seen from the paper book. On behalf of the revenue nothing was pointed out to controvert the above facts by pointing out any material to the contrary. The conclusion arrived at by the Tribunal, thus being based upon concurrent findings of fact, does not give rise to any question of law. Resultantly the said ground of appeal is also rejected.
MAT - Adjustment for the purpose of computation of the book profit under section 115JB - HELD THAT:- Tribunal has merely applied the decision of the jurisdictional High Court to the facts of the case. Under the circumstances, the said ground of appeal does not give rise to any question of law and is, accordingly, rejected.
ADMIT. The following substantial questions of law arise for consideration:
(1) Whether the Income Tax Appellate Tribunal has substantially erred in upholding the deletion of disallowance under section 14A of the Act of ₹ 13,44,076/while computing the book profit under section 115JB of the Income Tax Act, 1961 ?
(2) Whether the Income Tax Appellate Tribunal has substantially erred in upholding the deletion of addition of ₹ 44,74,000/being provision for doubtful debts, while computing the book profit under section 115JB of the Income Tax Act, 1961 ?'
(3) Whether on the facts and in the circumstances of the case, the Income Tax Appellate Tribunal has erred in upholding the deletion of addition of ₹ 21,74,000/being provision for warranty, while computing the book profit under section 115JB of the Income Tax Act, 1961 ?”
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2014 (10) TMI 1001 - BOMBAY HIGH COURT
Deduction u/s 80IB(10)(d) - as per tribunal it is apparent that Assessee cannot be termed as a mere contractor. He is a developer and claiming rights in the land/immoveable property, that is how he proceeded to execute necessary agreements and appoint agents to carry out the construction - HELD THAT:- Tribunal's order, confirming that of the Commissioner, does not raise any substantial question of law. It was not for the Assessing Officer to have sat in judgment over the satisfaction of the statutory Authorities. The documents in that behalf together with recitals were conclusive of the rights of the Assessee. - Decided against revenue
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2014 (10) TMI 1000 - ITAT AMRITSAR
Legality of notice issued u/s 142(1)/143(2) - scrutiny through CASS - notices issued by the ITO, Ward 1(1), Bathinda, himself not by the ITO, Faridkot - Jurisdiction of ITO - notices invalid and without the authority of law - Jurisdiction of Assessing Officers - Transfer u/s 127 - HELD THAT:- The Accountant of the assessee-firm represented the matter who stated the case of the assessee was assessed with A.O., Bathinda and accordingly the assessee was required to file the copy of the return, etc. The objection of the CIT(A) is that this is an information which has been noted in the order-sheet dated 15.09.2009 and no legal objection was in the proper form.
Such type of objection or information do not make any difference since the ITO has noted the facts of the case and accordingly the file was transferred but only on 18.01.2010, which in fact, could have been done immediately on 15.09.2009, keeping in view the provisions contained u/s 124(3)(a), but the same was not done. Treat the said information dated 15.09.2009 as legal objection u/124(3)(a) of the Act. Therefore, the assessee and in the absence of any transfer order of the case from ITO, Bathinda, to ITO, Faridkot, the argument made by the learned DR do not help the revenue and the notice issued is bad in law and the assessment so made is directed to be quashed. Thus, ground no. 1 of the assessee is allowed.
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2014 (10) TMI 998 - ITAT DELHI
Addition u/s 43B r.w.s. 36(1)(ii) V/s allowable business expenditure u/s 37 - “good work reward” - assessee has not submitted evidence to show that actual payment has been made before filing the return of income as bonus - whether “good work reward” constitutes bonus within the meaning of the section 36(1)(ii)? - assessee is engaged in providing recruitment consultancy - HELD THAT:- As decided in SHRIRAM PISTONS AND RINGS LTD. VERSUS COMMISSIONER OF INCOME-TAX [2008 (4) TMI 273 - DELHI HIGH COURT] such expenditure paid for good work reward is allowable as business expenditure u/s 37 (1) of the Ac.
These payments were not of the type contemplated by the Payment of Bonus Act. It was held that it was an ex gratia payment or some sort of reward given to an employee for the good work done by him and would therefore, fall within the category of expenditure incurred for the purpose of business expediency and for improving the working of the assessee. Therefore, it would not fall within the meaning of section 36(1)(ii) of the Act but would fall within the ambit of section 37 of the Act. - decided in favour of assessee.
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2014 (10) TMI 997 - ITAT PUNE
Deduction u/s. 80P(2)(a)(i) - HELD THAT:- Assessee has filed the copies of the decision of the Pune Bench of the Tribunal in Niphad Nagari Sahakari Patsanstha Ltd. (2015 (1) TMI 1004 - ITAT PUNE) on record and the Departmental Representative for the Revenue has neither controverted the same nor referred to any contrary decisions. In view thereof and for the sake of consistency, we uphold the plea of the assessee that it is entitled to the claim of the deduction under section 80P(2)(a)(i) of the Act
We direct the AO to allow claim of deduction under section 80P(2)(a)(i) of the Act on the interest income received from the bank. The grounds of appeal raised by the assessee are thus, allowed.
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2014 (10) TMI 996 - ITAT PUNE
Claim of deduction u/s 80P(2)(a)(i) on the interest income received from the bank - HELD THAT:- We direct the Assessing Officer to allow claim of deduction under section 80P(2)(a)(i) of the Act on the interest income received from the bank. The grounds of appeal raised by the assessee are thus, allowed. See ITO Vs. Niphad Nagari Sahakari Patsanstha Ltd. [2015 (1) TMI 1004 - ITAT PUNE] - Decided in favour of assessee.
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2014 (10) TMI 995 - SC ORDER
Whether on the facts and in the circumstance of the case and in law, the Tribunal is right in confirming the order of CIT(A) in allowing assessee's claim to carry forward deficit
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